Pandemics, Economic Freedom, and Institutional Trade-Offs

Abstract

We argue that institutions are bundles that involve trade-offs in the government’s ability to provide public goods that affect public health. We hypothesize that economic freedom reduces diseases of poverty and may increase diseases of commerce (those associated with free movement of people, such as smallpox or COVID-19). We focus on smallpox and typhoid fever in the late 19th century and early 20th century in order to build on recent works that make arguments similar to ours (Troesken 2015). Our evidence shows that economic freedom reduced typhoid mortality but had no effect on deaths. The implications for COVID-19 are that the tradeoffs with freedom may not be too severe in the short run, and in the longer run, the wealth benefits from economic freedom are likely to be crucial in reducing vulnerability to commerce diseases primarily from their impact on comorbidities (such as diabetes and heart disease), each of which are reduced by wealth. Thus, economic freedom is on balance good for public health, which suggests that this bundle, while involving necessary tradeoffs, might be the best one for dealing with pandemics.

Keywords: COVID, Economic History, Pandemic, Smallpox, Typhoid Fever, Economic Freedom

JEL Classification: N30, H40, I15